After a strong first quarter, the technology company has been snagged by the operational issues that plagued airlines and airports in June. It was all going so well, too.
While most travel companies bounced back in the second quarter after restrictions were lifted, technology company Sabre was blighted by the airport and airline operational problems that peaked in June.
Lockdowns and other strict anti-Covid protocols across Asia Pacific also didn’t help, as international bookings in that region only recovered to 40 percent of 2019 levels.
“We were ready for it,” said CEO Sean Menke, referring to the “robust travel recovery” that was coming its way.
“Unfortunately, some airlines and airports have struggled with the pace of the recovery, leading to capacity growth moderating as the carriers and airports sought to stabilize operations with a backdrop of strong consumer demand,” he added.
As a result, the Southlake, Texas-based technology giant reported a net loss of $193 million for the three months to June 30, 2022. This was on the back of $658 million of revenue. In its first quarter it generated $42 million of net income.
Amadeus last month revealed a significant second-quarter net profit of $242 million. However, Sabre did report $24 million in adjusted earnings before interest, taxes, depreciation, and amortization for the second quarter— an improvement on the $5 million in its first quarter.
Delays, cancellations, lost bags and lower customer satisfaction “constrained near-term net new bookings as passengers seek to avoid these issues,” Menke said during an earnings call Tuesday.
Europe in particular couldn’t cope, with consumer demand outpacing the ability of airlines and airports to efficiently handle the passenger volume due to staffing shortages and other factors.
Meanwhile, other impacts to its results included a $30 million “fair value loss” on its $80 million investment in shares of Global Business Travel Group (otherwise known as American Express Global Business Travel), a $12 million reduction on the gain on sale of AirCentre, and higher interest expense.
Its second quarter had actually showed the strongest sequential quarterly bookings improvement since the pandemic recovery started in June 2020, the company added.
Sabre did take comfort in its hotel division however. There’s perhaps one upside from fewer people flying, if they happen to check into domestic hotels that use Sabre’s reservation software.
The second quarter revenue of $658 million compared to $420 million in the second quarter of 2021, and Sabre said part of that increase was down to “favorable rate impacts” in its Travel Solutions business as international and corporate bookings improved. Its Hotel CRS transactions continued to lead the recovery and in the second quarter were 102 percent compared to the same period in 2019.
It also sees a brighter future with new distribution deals.
“Our success on the customer front, we have had some nice ones on all lines of business, especially in distribution, for example GBT and Hopper,” Menke said during the call.
Sabre’s $80 million injection into Amex GBT in January this year also included a pact to work to “accelerate product innovation and develop a distribution ecosystem that meets the future needs of customers and suppliers.”
In February, Sabre also expanded its strategic technology partnership with Hopper, which recently topped Airbnb as the online travel agency with the highest market share of monthly active users.
“There also some other wins we’ve not yet announced, but you can expect to see volume gains in the back half of the year,” Menke added.
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Photo credit: Delays, cancellations, lost bags and lower customer satisfaction dented Sabre's second-quarter results. Alex Suprun / Unsplash